PROUT GEMS 02: Hoarding of wealth leads to economic crisis

Given that wealth must be measured in terms of purchasing capacity, if there is hoarding of wealth then capital becomes concentrated in the hands of a few individuals (including corporations) or the State and its purchasing capacity is undermined. This concentration in the value of wealth (or what could be purchasing capacity and therefore what could be money rolling through the economy) is a fundamental cause of economic depressions. The second and related cause is when money in the possession of a few individuals, corporations or State capitalists stops rolling. The Asian crisis is symptomatic of this second cause.When large amounts of money were withdrawn from economies such as Indonesia and Thailand, that money could no longer roll through those Asian economies.

Instead the money found its way into USA stock markets for the acquisition of corporate stocks, creating an unusual and unprecedented demand for shares traded through US stock exchanges (the prices of which are not truly reflective of the fundamental businesses or investments of those corporations). This usage of money essentially simply pushed up the value of stocks/shares, while remaining entirely inert or unutilised for real productive purposes. It has now caused inflation in the value of shares traded on US stock markets, while at the same time the withdrawal of wealth from Asia has resulted, or rather added to, the inability of those Asian economies to produce their minimum necessities and to provide for any special or maximum amenities, first to the more meritorious and secondly to the common people. At no time has the people's economy been considered. For all intents and purposes innovation in Asia has been stifled, the original wealth that rolled in and was subsequently withdrawn was not used to increase the real purchasing capacity of the people because it was not first properly applied in building up the minimum necessities of all people, but rather focused more on providing special amenities for a limited segment of society or class of persons. In a nutshell, there was no rational distribution. The capitalist reasoning in withdrawing money from Asia was that they thought that if the money was allowed to roll freely in Asia then their profits will decrease (even though it would bring relief to the common masses). Consequently, they withdrew their money without any control on them by the local economy and local people.The psychology of the capitalists is to make profit from the rolling of money, and as in Asia when they discover that the investment of money does not bring profit up to their expectations, then they stop rolling the money in that particular economy. It brings economies to it knees. The money is instead kept immobile or inert or channeled into unproductive purposes by, for example, the acquisition of US related stocks. While this may give a pretence of riches it is really a type of concentration of wealth away from where it could be better productively applied in the medium to long term so as to give greater opportunities for the all-round welfare of a greater number of people. Such pretence of riches also does nothing to increase the purchasing capacity of that wealth.

In PROUTist terms the wealth is said to have lost its value because it is not assisting in increasing the purchasing capacity of most people.Keep money rollingAlso, in PROUTist terms the value of money depends on the extent of its circulation. The more frequently money changes hands, the greater its economic value. The greater the value of money, the greater the prosperity in individual and collective life, and the greater the opportunities for all-round welfare. The people's economy then flourishes. While money may well change hands through the US stock markets, that does not amount to true circulation of money in the productive parts of the economy which are concerned with the provision of minimum necessities for all and special or maximum amenities to first, the meritorious and secondly, to the common people. This contradiction in capitalism and its false claim to being an efficient allocator of wealth and distributor of resources arises due to the self-centered profit motivated psychology and the control and accumulation of wealth for the benefit of a few rather than for the welfare of all.However, had the consumption motive been the motivating force for production there would have been a continual circulation of money through the productive parts of the economy centered around the needs of the people.There would easily be a proper and equitable allocation of wealth, money would circulate readily and the standard of living of all would be capable of increasing.